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tv   Worldwide Exchange  CNBC  March 10, 2010 4:00am-5:59am EST

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welcome to the show. the headlines today, wednesday, here in asia, we're watching china's exports and import
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figures for february blowing past expectations. >> in europe, greece may be close to seeking imf or foreign help if rates don't change. and in the united states, reports say hold off on hiking dividends until the financial reform clouds clear up. >> welcome to "worldwide exchange" with ross westgate, brian shactman and myself, christine tan. here in asia, it's 5:00 p.m. in singapore. let's get a quick view of where asian markets are trading or have closed today. there was some optimism coming from china after the strong trade data. but in japan, nikkei 225, a little bit of prot taking going on there, but it's pretty much flat at the moment. that helps offset any weakness coming from the falling toyota that we see.
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the shanghai composite, down 0.66%. the autos and property sectors getting hit badly. elsewhere in asia, we're seeing the south korean market moving to the upside, as well. the aussie markets are pretty much flat. ross. >> hey, christine. european stock markets are a little get mixed. it was a mixed close last night, as well. we're pretty much where we started the trading day. the ftse 100, 5597. we closed at 5596 yesterday. barely flat. in terms of sectors that are slightly firm, resources, energy and banks firmer. health care, media and technology are all slightly down. british prime minister gordon brown says there will be a preelection wujt in the uk in two weeks time. wednesday, march 24th is the date for that. brian, good morning to you.
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>> hey, ross. thank you very much. here in the states, it is two minutes past 4:00 a.m. in the northeastern part of the u.s. slightly higher in markets on tuesday, but one thing we're going to touch on today, low volatility, low volumes, what does it mean for you as an investor? right now we're positive by about 4 points in the dow, less than two in the nasdaq and we are essentially flat in the s&p 500. christine, over to you. >> thank you very much for that, brian. joining us now is arjuna mahindra. good to have you with us. >> hi. >> where you stand, we got good earnings coming out from hong kong, cathay pacific. we had good economic data coming out from china where you are. where does all this leave equity markets? is it a gift for more equity markets to move higher from here? >> well, i don't think the
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impetus for markets to move higher is going to come from this data itself. just to put the data into perspective, chinese exports, which a lot of people have been talking about in the last few hours came out very strongly, had% to 6% year on year. when you look at the absolute number, that was about $95 billion exported in the month of february whereas the peak for chinese exports in 2008 was something like $136 billion in a month. so we still haven't really turned to growth. there's still a long way to go. and i think equity markets are priced in, a fair mark of good news. now they are concerned about how these slowing measures in china, these head winds of policy to try and curtail future inflation are going to impact domestic spending. there are labor shortageses emerging in some of the export regions in southern china. all these are, i think, providing head winds against equity markets outperforming in the very short-term.
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longer term, i'm fairly confident that once this fear of inflation st behind us, perhaps in the next six months, once the policy measures have taken effect and inflationary pressures subside, then we will probably be on a better footing. but the inflation numbers from china come out tomorrow. i think they should come in at 2.5%. that will just continue to drag along the fears about further tightening down the road. >> okay. arjuna, china will obviously be a big focus. but if you look elsewhere, we're having debt problems we're seeing in greece. that seems to be putting things on hold over in europe. is this somehow encouraging foreign fund in-flows more into asia into the emerging markets here? >> i think funds at the moment, from my perspective, are probably going into safer havens and that typically means the larger, more liquid stock
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markets and bond markets, which are really still in the u.s. and europe. so i don't really see a surge of funds coming into the market. the real fear is that central bank action to curb inflationary pressure in emerging markets could mean that corporate profits would underperform for a short period and that will, i think, keep expectations on a tight leash. so i suspect a lot of money will go back to the safer havens. just last week malaysia raised rates. money is going to flow towards the markets where the monetary policy is going to be kept loose in my view, at least for another quarter. >> arjuna, it's brian shactman here in the states. in terms of the indices in the
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equity markets, we creep higher, but volatility creeps lower. volumes creep lower. and the question really is, is there something around the corner that will be seen as some sort of a catalyst in either direction or are we in some sort of low here? give us your perspective on what to make of it. >> yeah. i mean, the whole sort of thought that is hanging over the markets is this question of whether this huge private debt crisis, which was transformed into what is now, it appears, a public debt problem, as we've seen in greece and these other southern european countries, will that ever get resolved effectively? now, it seems to me the only way governments can handle this public debt crisis in greece and, you know, in some of the other countries is to raise taxes, to cut spending, do all the difficult work which a democratically elected politicians are finding credibly
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difficult to implement. those higher taxes and surpluses will hopefully reduce that debt over time. but the question i guess the market is asking is will that mean economic slowing to the point to where earnings of companies, which really is the bread and butter of markets, both credit markets and stock markets eventually get impacted and will that push stock markets down in the near term in anticipation of that? so i think that is what is keeping markets in abeyance. in terms of markets, price to earnings ratios suggest that we are sitting on 20-year averages. so markets are fairly priced. i think what is happening right now is the longer term investors, people who have the luxury of investing for, you know, three to five years, are starting to look for bargains
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here and there, but it's the shorter term traders who are conspicuously absent. >> arjuna, what is your favorite asset last right now? which one do you choose? >> well, i mean, technically, i would like commodities and a subset of commodities, that's agricultural commodities and energy related commodities. those, i think, will outperform in the short-term because there's clear evidence that the demand for energy in emerging markets is running very strong, despite tight monetary policy, etcetera, people are consuming more electricity, etcetera. so the energy space will be firm. and agricultural commodity prices, i think, are surging higher because of weather-related conditions around the world, which have been quite, you know, adverse over the last few months. >> arjuna, stay with us.
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thanks for now. still to come on the program, of course, we're going to be talking about the 10th anniversary of the burst of the dotcom bubble. wol be the winners and losers? stay tuned.
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prime minister gordon brown is talking about the fragility of the recovery. he has also suggested or said there will be a budget in two weeks' time, a preelection budget in the uk to stim ewe laus late the nuclear clean air energy. he said the world must build on the g-20 agreements to coordinate national economies and banks need to become better capitalized over time. they must focus on opening up trade. so certainly we are on the preelection footing and he's launching the way they're going to fight that election on the economic policy. as far as fixed income markets are concerned, the bund is fairly steady. the 10-year bund yield, 3.14%,
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fairly unchanged. investors looking beyond greece for failing to implement sustainable savings. as far as trading is concerns, drifting sideways in trade today. 10-year note yielding 3771%. theed 40 billion three-year debt offering metro bust demand. we've got another 2 billion 10-year issue later today that will provide the focus. what about the currency markets? christine has that. >> i do, indeed, ross. dollar/yen has risen back to the $90 level. dollar looking stronger against the yen, but stronger against the euro. greece situation, debt problems there, 1.3576 is euro/dollar. sterling/dollar, 1.4933 and euro/sterling, 0.9093, brian. >> thank you, christine. finally, we get some
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economic data to deal with in the states, but it's the second tier variety. inventories seen rising 0.2%. and then at 2:00 p.m., the monthly federal budget statement will be released. also, weekly u.s. inventory data is out at 10:30 a.m. a dow jones survey calls for oil to build by 1.7 million barrels, gasoline by 100,000 barrels and distillates the drop by 107,000 barrels. the american patrol lee yumm reported yesterday a large build in crude. we'll see if that fits the thesis. american outpiters reports results before the opening bell today. tuesday it's closing its upscale martin and ossa chain. we hear from brown-forman, hot and ski vail resorts. after the close, we get results from hot topic and men's warehouse.
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the usda will release their global crop report at 10:00 a.m. new york time. i also want to point out in the news today, u.s. regulators are telling banks to hold off on hiking dividends or buying back shares until the economic and political uncertainty surrounding the financial sector clears up. the financial times says the treasury will have to meet certain criteria before returning capital to shareholders. banks will have to wait until lawmakers drop new rules on capital requirements and how to resolve failing firms. >> brian, let's show you where we are with european equity markets, just nudging higher. this is where we stand, 0.25% for the cac 40, we'll bring you up to speed with where we are on
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those equity markets. first, we start off with anna who is here with my here in london. resource stocks are firmer at the moment. the ftse 100 moving higher on the back of that. barclay's very much in focus, but not to the upside. moving a little lower in early trade, although it's come off its lows of the session, with down around 0.6% right now. reports in the "wall street journal" and in the financial times suggests that the banking giants could be heading to the united states to make some acquisitions. the story goes that because they fought lehman brothers investment banking business in the u.s., they need to balance that out to improve their capital ratios with a retail business in the u.s., as well. this report is not confirmed, but sources are saying if they do make a deal, it will be big. standard life is also in focus. >> more talk of m&a? >> yae yes. a couple of days ago, we saw forth ports being the subject of
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takeover talk. tullow oil has been a focus of it, as well. tullow coming forward and saying they confirmed that they are in preliminary talk wes a third party. it goes to show the climate at the start of this year, four takeovers and in particular in the small and the midcap, we are going to see a lot of that taking place. that is how the ftse is. >> thanks very much indeed for that. patricia, the numbers seem to be disappointing. >> they were really below expectations. exports down 6.3%. the market was looking at a gain of 0.8%. so exports are not looking good. this is why the trade data itself almost halved for that month of trade surplus to a little bit pore than 8 billion euros. apart from that, of course, we
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had at the same time numbers coming through from proboard. and there it seems a lot of trade is going on because the cargo number for the month of february was up about 30%, which is much better than expected. so fraport trading up about 0.24%. in terms of the market, we are not too far away from our session high yesterday of 5,200. >> in terms of the individuals stocks, what has been the major reaction to munich re? >> exactly. i think this is a very good that the company was trying to get as much detail as possible. munich re at the moment trading up 0.3%. they are saying that they're now going to exceed the $2 billion euro mark whereas only a month ago, they were not that sure, is very positive indeed. interesting move on e.on.
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e.on started trading down 0.34%. the numbers weren't that great. however, we just heard from the company that they're going to give us more details and goals for 2010 at their summer meeting. that stock is trading up 0.7%. >> thanks for that, patricia. stephane is in paris. the cac who is up 0.25%. what were jt's figures like? >> they are down 77%, ross, because of the slowdown in the advertising sector. the company posted a margin better than expected for the last year and operating profits slightly better than the average forecast. that being said, the forecast for this year is a bit the cautious. jc says that 2010 will be a year of weak growth and the company also said it was too early to tell if the recovery was still -- was already on track for the advertising industry. jc decaux will continue to pay a
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dividend to shareholders and will continue to implement street to cash to cost management in this year. also, we had comments from the ceo of the can company. he said the first two months of this year were positive and that the business conditions have been improved since october last year, but still is not expecting any recovery before the next year and the stock is down, 0.4%. ross. >> makers of building materials are lower today, as well. why is that? >> because the forecast on the construction sector is still a bit gloomy. for that reason, ing lowered its recommendation for lafarge, themaker of building materials, both from hold to sell and they are among the biggest decliner on the french market this morning. and lefarge is trading 0.4% lower right now. now over to christine in singapore. >> stephane, thank you very much for that.
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let's get back to our guest host, arjuna mahindra who is still with us in hong kong. arjuna, where you sit, obviously, that strong trade data coming from china. does this somehow justify the case for a one off re-val you autoation? >> i don't know about the one off valuation, christine, but we definitely feel in 2010 we will see a resumption of chinese policy move to revalue the renminbi against the u.s. dollar. primarily because it's a fairly useful policy tool against inflationary pressure. when you think of it, if the yuan becomes, you know, more expensive against the dollar, that would mean that imports of food and other commodities would actually become cheaper in yuan terms. so that could be a very important tool for the chinese to counter the inflationary
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pressure. i mentioned a few minutes ago that inflation is the main policy concern of chinese officials at the moment. and this is really being stoked by the huge amounts of bank lending, which were unleashed by the chinese regulators last year to try and counter the reseg. and that overhang of monetary liquidity is very evident in the money supply numbers. and there's a fairly strong correlation between strong growth of money supply and inflation in china. so this really is going to be an overhang on chinese equity markets for the next three to six months until we see some closier on the problem of future inflation and inflationary expectations. i think we will see several different types of policy measures to try and address the problem and revaluation of the renminbi is one of those. >> meanwhile, we're fixated by these chinese holding of treasuries. there was a fund manager
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yesterday in the i'd, loomunite states yesterday, loomis sale, who was talking about debt. wa do you make of his comments? >> well, as i said earlier, the problem of private sector debt which started the crisis two years ago was transformed into a public sector debt problem. really, when people talk about the taxpayer having bailed out the banks, i think that's slightly not the case in the sense that it was really the public government surpluses which went into the banks and thereby bailed him out. that is the big worry that's looming over debt and equity markets at the moment. how will markets address this problem? greece and these other countries pale in comparison with the uk
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or the u.s. it's just that those larger economies are much more balanced in terms of activity and access to the large global financial markets and, therefore, they haven't faced a crisis of confidence asset. >> arjuna mahindra, we thank you for staying with us. we're going to take a quick break. cathay pacific revenues may be flying high. stay with us here on "worldwide exchange." 
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welcome to "worldwide exchange." the headlines today, here in asia, cathay pacific reports its best half year earnings in two years. we'll have a first on cnbc interview with its ceo. >> in europe, the british prime minister gordon brown says britain will maintain its aaa credit rating although he's worried about growth in the euro zone. >> and in the u.s., regulators hold up a stop sign reportedly telling banks to hold off on hiking dividends until the financial reform clouds clear up. >> you're watching cnbc's
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"worldwide exchange." with christine tan, brian shactman and myself, ross westgate. we're just an hour and a half into the trading day, the ftse cnbc global 300 spiked, 4,510. as far as the asian markets are concerned, christine has the latest on that. >> i do, ross. the nikkei 225, this market finishing up pretty much flat. they came in better than expected. but that positive data failed to offset any weakness coming from foye toy. the hang seng is pretty much flat, as well. we have corporate earnings coming out from there. earnings coming in better than expected. we'll have a first on cnbc interview with the ceo. shanghai composite down 0.7%. lots of concerns there. tightening elsewhere. it's a mixed picture, as well. south korea moving to the upside. bombay finishing pretty much flat. brian, over to you. >> thank you, christine. good morning. it is 29 minutes past 4:00 a.m.
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here in new york. let's look at the stock futures where we are positive now and with a little bit of strength by more than 20 points just for a perspective and you see it gathering strength right in front of you. we are seeing a little momentum on the positive side here, as well. we have a big bond auction, 10-year note, about $21 billion worth later today. ross, over to you. >> we're just about to get industrial production data out of the uk, brian. down around 8.8% year on year. we're just going to get out in a few moments. this is the same time where gordon brown has come out and said that the economic recovery is still fragile and cutting spending would put it at risk. let's get those numbers for you. manufacturing output down 0.9% on the month plus 0.2% on the year. the consensus is plus 0.3% on the month. that is the biggest month on
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month fall since august 2009. january industrial output, minus 0.4% on the month. we thought it would rise 0.3% on the month. the biggest month on month fall since 2009. manufacturing output up 1% three months on three months strongest since march '06. the fall inferring due to reversal from strong december and poor weather in january. so just to remind you, manufacturing output, contracted 0.9% month on month. the consensus was to rise. industrial output contracted minus 0.4% month on month. you take a look at the three-month figures, it's the strongest since march 20067. the immediate reaction is for sterling to weaken. but it might just rally when it looks lye through that.
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do we have to look through it and wait for the february data? >> yes, probably we should because if we look at what's been happening the past few months since september 2008, production has been driving steadily. and the other indicator that we could see a better performance is the orders numbers that increased to the -- by the fastest pace since 1996. and also pmi manufacturing is still seeing further improvement in the coming months. so i think it's a one off event because of the bad weather and because of the big jump we saw in december. and we should overlook it and wait for the coming months to confirm. >> although gordon brown has just come out and said, look, the recovery is fragile. how fragile is the recovery? we so no benefit from a weaker pound. fitch has come out and said their heightened fears, essentially, about dealing with the budget deficit.
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so how fragile is the economy? >> well, the thing is, the economic data is positive for a number of months now. but then we're starting to see weaknesses in a few areas and it's raising concerns. i think the deficit problem is, at the moment, the highlight, really, and probably most people are focusing on that. but if we actually look at the numbers, of the economic release numbers, we'll see improvement compared to the euro zone. pmi numbers continue to rise above the 50 mark, indicating further growth in the coming months. but also, one thing is the draid trade data is a little bit disappointing and maybe a bit worrying that the weakness in sterling is not feeding through. however, again, i think if the bad weather this year, late 2009 and beginning of this year, that's having an impact actually on some of these numbers. so it would be sensible to wait
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and see what happens in february and march before making any further conclusions. >> this is christine. how much inflation does this create for the chinese domestic economy and does this further reinforce the case of further monetary tightening? >> yeah, it does lead to less spare capacity in the manufacturing sector, which actually leads to higher prices. the numbers are coming out tomorrow. there are expectations and rumors that are number will come in stronger than expected at 2.7% as opposed to the 2675% than expected. this would reinforce the argument for tightening monetary policy sooner rather than later. at standard chartered, still expect the bank of china to hike rates by 0.7 basis points at the end of the first quarter and the
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end of the second quarter. so it will be interesting to see what we get tomorrow and it will be interesting to watch out for the cpi numbers in specific. >> the consensus is the second half of this year might be weak. is your perspective changing, as well. >> no. we were with the view that growth will slow down in this year and that's why we were calling for the fed to keep rates on hold until the third quarter. so we were with the view that we were seeing an increase in accelerating phase of improvement in the late 2009. but then we would see slowdown
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in the coming months and this would lead to lower recovery. >> all right, thank you very much for your insights. good talking to you. getting back to one of our top stories we're watching, cathay pacific is swinging back into the black with a full year net profit of $604 million. however, they warned that it remains cautious about fuel prices this year. joining us on a first on cnbc interview is tony tyler, ceo of cathay pacific. good to have you on the show with us. you're cautious still, but are you willing to say the worst is over for the company? >> it certainly looks that way and i certainly hope it is that way. i think if the world economy continues to recover on a steady, upward slope and if we don't see the horrible spiking
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or increase in fuel prices, then we should put the worst mind us. you're seeing better traffic and cargo capacity. how quickly do you want to increase capacity from here on? >> we've got a cautious increased currency for this year, low single digits. of course, we have spare capacity. if the market picks up a bit quicker than we planned, then we are in a position to put more flights on very quickly. i think particularly on the cargo front, we might end up doing that. >> revenues still remain at levels we've seen prior to the crisis. you haven't seen that big improvement in premium traffic. when do you expect to see a full recovery year? >> sorry. we're not back to where we were prior to the crisis. >> that's what i said. sorry. >> oh, i'm sorry, i missed that. >> revenue, you're still below levels that you've seen before the crisis. you haven't seen a big pick up in passenger or premiums traffic. at what point will 2010 be the
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year where we see a full recovery in yields? >> well, we have seen in the last quarter of last year we saw quite a strong recovery in front end bit and, of course, in cargo. and that momentum has been carried forward into the first couple of months of this year, and that's obviously very encouraging. i'm afraid its too early to tell whether this will be the year that we get back to where we were. i'll be very happy if that happens. but i don't think we will, but i hope i get surprised. >> you know, it's interesting, mr. tyler, it's brian shactman here in the states. you know, i look at the traffic numbers. they're fascinating to look at. but i look at cargo. 25% to the upside. can you give our audience some perspective on how is that relative to your passenger traffic? >> cargo revenue constitutes
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almost 30% of cathay pacific's revenue. so it's a big business for us. the chinese carriers, it's a higher proportion, korea, as well. so asian airlines are combination carriers. cargo is a big part of our business. carrying forward into this year is a significant recovery in shipping goods from particularly southern china and yankee river delta to the rest of the world, to north america and to europe. we were concerned that this was just restocking when we first saw it happening. but as time goes on, we are reassured that perhaps we are seeing some sort of a pick up in the market in general. and i think with people wanting to keep our industries low, that helps their cargo. if you want to keep your industries low, when you need stock, that helps us.
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>> tony, we've seen energy prices being fairly steady over the last six months. it's been a while. are you counting on things not changing in that department? how much of a benefit is that going to be for the whole industry? >> let's not forget that fuel prices went up, really, with the low of 40 or so dollars a barrel. it just about doubled in the course of the year. it helps you to plan your about it business. we'll we're reasonably well hedged in terms for 2010. i think as long as we don't see any horrible volatility and, of course, a nasty increase, we're reasonably well set for this year. >> looking at the broader picture, tony, how is the collaboration with air china going? what's the big picture there? how do you see that evolving on
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a multi year basis? >> well, over the last four years, it's improved. we've come a long way, let me put it that way. >> we're buying into china cargo, a 49% economic interest. we see that as a very possible port. clearly, this relationship will develop and it's very important to us and to them. >> can you give numbers? >> i can't give numbers. if you look at this year's earnings from us, subsidiaries and associates, a large part of that is from our interest in air china. i think the business prospects for air china has to be seen as positive. they're the biggest and perhaps most successful major airline in
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the world's fastest growing market and we're a substantial shareholder in that so clear that's very well positioned. >> tony, obviously china is a big market for you. but do the latest earnings numbers that you just reported, does this change your restructuring plans? >> no. what we're doing is we obviously are constantly reviewing our business model, does our business model make sense, will it continue to make sense given the structural changes that may be happening in the market and the modeling we've done indicates that we have a substantially sound business model. we've always got challenges, profitability, chals from competition from new hubs, competition from hub bypass, more flights between points which we serve on a hub basis. you know, the world is always going to get more and more challenging, more and more difficult. that's been our history for the last 60 plus years and we've always been pretty successful in
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relative terms to compare with our peers and now we want to make sure that continues. >> tony, appreciate you coming on the show. thank you very much for being with us. tony, ceo of cathy pacific in a first on cnbc interview. coming up next on "worldwide exchange," ross? >> the bosses are gathering for a summit in abu dhabi. geoff is there to join us. >> hi there, ross. we're a couple hours away or so from eric schmidt from google making an important address. we're obviously going to listen to that. and rupert murdock gave the key note speech where he shook things up with some comments on censorship and productionism. we'll have more on that from abu dhabi right after this.
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welcome back to "worldwide exchange." you're looking at the harbor shot in hong kong. i am told it's a balmy 15
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degrees cell seus. let's check in with ken moriyasu from the nikkei. moriyasu-san. >> it's actually very warm today. yesterday it snowed, but it's sunny now. the nikkei 225 ended flat. however, casio computer shares advanced more than 5% at one point after the president of the company said they are likely to see a $20 billion yen paradeling profit in fiscal 2010. also positive was sony, whose shares marked a year high after a lineup of 3d televisions yesterday. on a more worrying note, the nikkei reported that many businesses are saying sayonara to the business market. michelin prefers to invest in southern india. south korea's hyundai motor has ended sales of new passenger cars and now sells only buses in
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japan. also versace and office depot have halted sales here. the number of foreign businesses listed on the stock exchange has declined with 15 remaining as of today, compared with a record 127 back in 1991. no new foreign company folks have debuted since 2008. that was the nikkei business report. back to you, christine. >> moriyasu-san, thank you very much for that. you have a good day. ken moriyasu from the nikkei. let's take a look at some of the other markets we're watching here in asia. starting in china, the shanghai composite was 0.6% lower ahead of cpi data tomorrow. that's going to be critical. earlier today, chinese trade data blowing back expectations and have been talking about this. exports jumped 45% in january while imports searched 44%. lending growth of chinese banks
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felly half in february. in hong kong, the market closing flat after three straight sessions of gains. cathay pacific, of course, in focus. the carrier swung to a net profit in 2009. still in hong kong, we have civic pacific. now, australia was another market that pretty much finished flat. south korea's kospi traded slightly to the upside. with losses we're seeing in financials weighing on the index. so let me wrap it up and send it over to ayesha to take a look at the indian markets. she joins us live from mumbai for the indian business report. ayesha. >> thanks for that, christine. another quiet day with a gain of 11 odd points, which is in tandem with the asian queues we started off trade with. holding up is a couple of key
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heavyweig heavyweights. reliance industry is seeing the market does have that cushion and it is slowing you some traction by way of green on the screen. what is looking bad at this point in time, you have key heavyweight counters, the likes of party, mtpc, currently down by about 1 ma.5%. but the real action is in the primary and ipo listings. you have a new cob coming in, you have text mobile sitting at a 51% premium to its issue price. the 13590 is where the counter is sitting at. that what was the deb ewe tant of today. its the government of india's public offering which has opened today. >> ayesha, thank you very much for that. ayesha faridi, joining us live
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from mumbai. >> so top media bosses are gathering this week leaving such names as eric schmidt, rupert murdock joining them and geoff cutmore is going to be with them. what is the focus going to be on? >> reporter: you're very kind, ross. eric schmidt will take the stand here in a couple of hours time. his focus will be in innovation. but we know whenever google talks, there's always the chance that they'll slip something in about a new product or perhaps even a new technique for trying to capture market share. so that will be an important speech for today. we'll be listening closely to that and bringing it to our cnbc audience later in the day. but i also want to talk about the other issue of the dominate feature of the uae, and that is this $26 billion debt servicing issue for dubai world.
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that in many instances is at the heart of where this conference is about. when it came to reporting on that story, many of the local media outlets in the middle east weren't able to cover it in the same way that we were able to cover it around the rest of the world. and rupert murdock gave the key note address and opened this summit by saying, you know what? if you want foreign media companies to be here, if you want your local media to thrive, we need a light touch on censorship. we also need less protectionism against foreign owners. but there were a few people in the audience, i think, who were squirming in their seats as they heard rupert murdock say, if you want your industry to thrive, cut out the censorship. let's listen in a little to what he had to say. >> the greatest sector flourishes best in societies where government intervene with a light hand. with these incentives in place,
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you will build a kraet creative sector worthy of the great capital that you have planned. >> make no bones about it, ross, this is not altruism on rupert murdock's half. he's sunk $20 million into a saudi media company. he's moving assets into abu dhabi from other businesses around the world here. so he very much wants to be here. and the key is 330 million people across the middle east. revenues still growing here more strongly than north america or europe, so this is a place where the media barons think they can make money going forward. let me send it back to you for the time being. >> jeff, good stuff. thanks very much indeed for that. we turn our attention now to the currency markets. the euro and the pound are both seen falling this morning. the australian dollar hit a seven-week high underpinned by repatriation flows.
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chris is joining us now and arjuna is still with us, as well. chris, let's talk about the numbers from fitch yesterday and gordon brown is out this morning saying the economy is still fragile. where is the pound going from here? >> yeah, i'll just tell you, i think it does look fragile. you're going to ask yourself, where is the good news going to come from? i know they talk about the budgets coming through on march 24th, whether that's going be enough to turn the pound around. i think here on ing is what's going on at the real economy. despite the headline pmi looking quite good, the smaller numbers for the survey are far less robust. so we struggle to find the strong reasons for why the pound should reclaim recent losses
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anytime soon. >> arjuna, what's your view with this election pending, arjuna, in the uk? what's your view of what happened here? >> well, i mean, from an overseas perspective, the clear issue is the elections and until may, may 6th i guess is when you're going to have your elections, you know, the question is will it be a hung parliament. that's the issue. can you get a strong government to deal with this diteficit? and alongside that does the issue of whether the conservative party is sufficiently differentiating itself from the labor policy in terms of its policy mix that it's offering. hopefully if that evolves and you see a clear distinction between the two parties, we'll have the opinion polls coming out suggesting the possibility of perhaps a stronger government being formed either way. but until that uncertainty is resolved, we all are going back
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to this basic problem that i mentioned earlier which is this huge overhang of public debt and what is the recipe for resolving that? and clearly, these elections are absolutely critical. this is why i feel sterling is going to arrange trade until the election results are known. >> chris, are you taking the same approach with the u.s. dollar than you take with the pound? because if you look at the real economy, maybe the strength isn't justified. it seems to be strength in the dollar is relative to everything else. >> yes, you're right. the dollar itself, the dollar rally that we're looking for this year hasn't kicked off a toe. you can see that in u.s. yields, particularly she short end of the curve which remains incredibly subdued. but i think over time, i think that cyclical dollar rally will come through. i think the fed is moving along in terms of removeling key parts of the emergency measures and i think, you know, probably in late q dd 2, maybe in q3, they're going to start touching on some of those key issues that
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have generated this excess liquidity out there. when they start doing that, for example, the fed issuing term deposits, that's when i think the dollar can get a further leg higher. so we're looking for a further 5% to 10% rally in the dollar this year. >> and arjuna, one final thought for you before we let you go, how would you play the currency markets? >> well, right now, i'd still be quite positive by emerging market currencies. i think that's the clearest signal out there in the currency markets. when china starts revaluing the renminbi, you'll see the second get a second wind. interest rates in these markets are rising because of inflationary pressures. so you get a double whammy, if you like, higher yield on those
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bonds as well as currency appreciation. that would be the way i would play the currency markets going into 010. >> arjuna, thanks for spending an hour with us here on "worldwide exchange." arjuna mahindra and chris turner, thanks for your forex insight from ing financial markets. coming up on the next hour of "worldwide exchange," nuclear weapons, volatile chemicals and bonds? just how dangerous is the fixed income market right now? we'll find out what our next guest has to say on that and we'll talk about it right after the break.
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welcome to "worldwide exchange" on this wednesday. here are your global headlines. in the u.s., regulators hold up a stop sign reportedly telling banks, hold off on financial hikes until the stocks clear up. and gordon brown is worried about growth in the euro zone. and here in asia, china's export sxim port figures for february blew past expectations, reinforcing the case for a china use yuan appreciation.
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welcome to "worldwide exchange" been it is 5:01 a.m. new york time. whether you're sipping coffee or getting on that treadmill, we hope it's a good start to your day. if you look at the stock futures, it's not so great. we've been flip-flopping here. we're still positive in the dow by about 7 points, but we've swung about 17 points to the downside since our last check. so we've weakened a little bit. and the s&p 500 just a touch to the downside. so i was characterize that as a mixed picture in the u.s. equity markets at this hour. >> yeah sxp two hours into the session, we've pulled back from earlier highs. we were up 0.25% or more. the ftse 100 can't get away from this 5600 level. it's been pinned on that all week. resources, thchemicals, all slightly stronger this week.
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>> right. here in asia, this is how the picture is looking. mixed picture across the board. but in view of the currency markets, the dollar looking firmer against the yen and that is weighing -- that is helping out some of the exporter stocks over in japan. dollar/yen reached a $90 level again. euro, once again weaker against the dollar. lots of concern about debt in europe. sterling is weaker. 1.4900. euro/sterling, 0.9115. >> joining us for the rest of the program is neal michael. thanks so much indeed for joining us. equities have had a bit of a -- through all the worries about the debt crisis, equities have had a bit of a rally. the ftse 100 is pinned around that 5,600 level. at the same time, we've got a lot of issuance coming out on government debt. the most dangerous investment you can make right now is
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government bonds to weigh up equities or government debt. what do you do? >> well, i think ultimately there's probably more value in equities. equities are getting support from a continued improvement in the financial and economic environment, albeit a slow recovery. one thing on top of that, but the companies are beginning to make profits for the first time since 2008. and that's not just from cost cutting. that's also as a result of movement in their top line growth. going forward, we're likely to see good returns, not the kind of returns that we saw in 2009, but good positive return from equities. i think bonds is probably a slightly different matter. obviously, bonds are under pressure from excessive government debt. but ultimately, i don't think the bund yields will go too high. >> why? >> i think there will be a cap
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to the extent bund yields can go. ultimately, the main driver of bund yield is inflation expectations. the economic head winds suggest the recovery is going to be slow. that means inflationary pressure res going to be subdued. >> who keeps buying this stuff? >> well, there is a safe haven factor associated with bonds. i think the inflationary pressures will remain subdued, but ultimately, banks are also under pressure to improve the liquidity of their capital buffers for regulatory purposes, so that means that they'll continue to buy government bonds, as well. >> neal, it's brian here in the u.s. an interesting conversation, and you talk about the value of the equity markets, but a lot of investors here see the levels we're at and they're just
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nervous. even if valuations seem okay, we seem to be at the high end of things. and so they're nervous about putting new money to work here. >> absolutely, brian. strategically, i'm quite positive for equitier on the year. but on a short-term basis, you're right, they may have rallied too much in the short-term. if you look at the index, it's trading at the bottom of its range at the moment which suggests that the markets could be complacent and we can be in for a short-term correction. but strategically, i think the equities will continue to do reasonably well this year. >> you're with us for the rest of the hour. some of the other stories we're watching this morning, gordon brown, the british prime minister, has been speaking and he says the uk economy remains farther goil. >> recovery is still in its early stages and remains very
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fragile. there will be many months ahead of conflicting statistics, false hopes and mixed snams. >> the british prime minister said unwinding the fiscal and monetary support for the country too soon would be a mistake. a budget in two weeks' time will set out further measures to detail how the government will try to meet its goal over the next four years. brian. >> here in the states, regulators are telling regulators to hold off on buying shares until the economic and political uncertainty clears up. the financial times says the treasury and new york fed sent a letter in december reminding investors will have have to meet certain criteria before returning capital to shareholders. banks will have to wait until new rules on capital lending requirements and how to resolve
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those firms. trade data coming out of china is the latest indication of recovery in the chinese economy. february exports surged 45.7% from a year ago while imports rose 39.7%. the establishments to clamp down on lending appear to be paying off, as well. state media is reporting that new loans in china fell to about 700 billion yuan in february, half of january's lending levels. still to come here on "worldwide exchange," re-insurancer munich re boosted profits in the fourth quarter. after the break, we'll talk to the ceo and find out what the company expects from this year and beyond.
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spending by the u.s., uk and others have been a complete waste of time. that's what economists are saying. log on to to find out what's behind their reasoning. plus, takes a look at the best and worst performing companies since march 9th, 2009. asian airline cathay pacific posted its pest six-month profits in two years. a technical analyst tells us
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that the set to move higher. find out more welcome back to "worldwide exchange." right now, spot gold -- well, there is no price there. wonder why? i think there is something wrong with the chart. let's slip and go to the oil hot board and see how that one is stacking up. expectations are for a gain in u.s. crude supplies and apparently that is helping offset any gains we're seeing coming from chinese exports. falling to $81 a barrel. we are waiting for that board to come up. i'm told this won't be. but apparently oil is waeshg today, ross. >> yeah. as far as global equities are concerned, it's sort of -- we're stuck, i think. we've been stuck this week. european stock markets are fairly mixed. anna edwards is with us in the
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studio. >> we are stuck here on the european markets and the london market is certainly one of those not going anywhere terribly fast. barclay's is one of those in focus today. there have been reports in the "wall street journal" and the financial times that perhaps barclay's is going to be shopping for retail banking assets over n united states. remember, of course, this is the bank's board after the collapse of lehman's brought up some of its assets. so the logic goes, now they have that investment banking business. they need to balance that out with retail deposits hence going shopping with a retail business. we'll wait to see whether that transpi transpires. they have set further savings targets, they're not giving any comments on whether they're going to sell their health care business. but interestingly enough, they're talking about seeing the ftse 100 above the 6,000 level by tend of this year.
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tallet preboard is a broker in the midcap market. they're in preliminary talks with a third party. the stock was up 15% the last time i checked. now over to frankfurt and patricia. >> thank you very much, indeed, anna. we did see the intraday high of yesterday this morning. there's quite a bit of momentum. in terms of what we have for news, we have not so good news coming from munich re. and despite 2010 and '11 not being the greatest word of guidance, we have munich re coming in with a great set of prmps. they told us about their exposure of government debt, which is about 44% of their entire reinvestment portfolio, but also about 16% of that
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government debt is to be found in greece, portugal, italy and perhaps some other of these countries which we are starting to look at with more risk profile. we also had data coming through this morning. down 6.3% for the month. that was much weaker than what we were expecting. we were expecting another increase after a very strong december. that didn't happen. that also means that our trade balance and our trade surplus is dwindling down, almost hopping for the month of january. apart from that, of course, we had numbers coming through yesterday from phoenix. that stock continues to trade up, continues to be one of those hot stock necessary a very hot sector right now. again, it seems that some of these people out here say that the solar industry, the solar stocks in general could give a
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lot bit more upside simply because of the other sectors having rallied quite a bit from the solar sector. that's frankfurt. now over to stephane in paris. hi there. >> hi there. we have j.l. lacudi, posting a 77% decline of its advertising market. also, a stronger than expected operating profit, but the outlook is a bit cautious. jc has said that 2010 would be a year of weak growth .it's too early to tell if the markets started to recover. jc decaux is targeting the forecast quarter of this year. the stock is still trading lower.
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we're down 0.4%. also trading a bit lower, the c on of the company has said that the two first months of the year were positive and that the business conditions have been improving since october. but still, the markets should be slightly positive this year and the advertising industry will not recover before 2011. again, the stock is a bit lower on the french market. now back to brian in the united states. >> thank you, stephane. still to come here on "worldwide exchange," it has been ten years, believe it or not, since the dotcom bubble burst. we'll take a look back and see what will be the hottest trend then and the hottest trends for the future.
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it's been exactly ten years to the day since is dotcom bubble burst, sending the nasdaq that was trading at 5,328 and it's now 340. incredible. what does the future have for the sector? can we take those lessons investment wise and learn anything from it? julie meyer, is with us as is
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duncan bell. is there anything useful here other than don't invest in tom, dick, harry and john? what are the take aways from that era that can help us now? >> they focus on things that are tangible and things that people can buy and own and can be easily pirated. >> you know, but it's interesting, duncan, we have this separation now between new tech and old tech. i mean, the old tech survivors now have tremendous amounts of cash and they're so successful on their balance sheets. we have companies that have pretty good business plans and might not be making money. >> yeah, but that's the nature of the tech sector. when the recession happens, they didn't slow down. a lot of them laid off a lot of people. but they continued to innovate and they continued to take
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risks. all of these manufacturers have sets ready to go. but is anybody going to buy them? that's the elephant in the front room. but it is quite a sexy elephant, i suppose. >> 3d doesn't seem to be -- it's all in the mobile set, mobility seems to be where you want the focus. >> i think that's right. and the technology sector innovation continues from what's happening in the market, right? so from the dotcom, broadband was increasing. that's a constant. that just continues to reach out. and so the audience for these applications is most of society right now, which is why it's becoming of time, because you can develop an application. it can reach hundreds of
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millions of people. >> you picked out some companies here. >> all of these new devices, all of these have battery managed requirements, they're looking for good display technology. this is what dialogue semi conductor does extremely well. so they're riding a trend of the explosion of the smart phone market and all of this smaller device and so forth. i think what is interesting to me about palm is why would a guy like john rubenstein, who had been part of the phenomenal resurgence of apple, why would he want to do it again? what does he know that we don't know about what still needs to happen? and i think there -- as i understand their web os strategy and encouraging others to use
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web technologies, not mobile, it's about a more open approach than what apple has. >> do you like the palm approach, then? >> i like -- well, the palm pre, which is a relaunched product, but it's interesting that you say that from an analyst point of view. because the view from the blogosphere is that the pre hasn't measured up to expectations in items of what it does or how much it sells. and the general feeling from people who aren't so much stock market watchers is that palm -- >> well, this is about consumers rather than the analysts? >> well, it's one device of many that they expect to roll out. what's interesting is they say if you're a developer, it's tough to say which platform to develop, right? and the web will take you to whatever device. theirs is almost a nonmobile
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mobile strategy. i find that quite clever. >> i'm trying to get a sense of this. has the global activity reduced the amount of spending going to new technology and development? >> as i made the point earlier, broad backhand continues to claim through 2001, '2and '3which is part of the reason why we got involved in skype. that enabled people to want to do free calls on the web and it made it possible. now you have the same thing with mobile usage. does anyone know anything without a mobile phone? so these technologies -- >> i've got too many mobile phones and devices. i only want one. i get swamped. >> but it is becoming -- >> julie and duncan, there's a whole set of companies here. you have social networking, mobile, search and all the media sites and the communication. there are companies trying to put it altogether, whether it's
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google, apple, amazon, microsoft. who is ahead in that race right now? >> apple, closely followed by google, i would sigh. >> why? >> because everything else is following in the wake of the iphone, everybody else will be following in the wake of the ipad, whether or not that takes off and becomes a massive thing. it's certainly going to be a big seller. >> well, the winners are the companies that are architecting the business models for the ecosystem. this organized the economics of the situation. what microsoft is doing is to give the user something back for the disclosure of their personal data. i understand different kinds of ideas that they're doing and i think it's a clever strategy. whether or not it can move the bar, microsoft through bing can challenge google, it will be interesting to watch. >> too late, maybe.
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>> i'm just wondering, does this somehow raise the question of security? >> yeah, i think that's fair to say. do you mean everybody is in the habit of nicking everything? yes. >> yeah, kind of. >> neal, let's just bring you in on that. we've got tech specialistser here, as well. how much should you be taken in your portfolio and are you putting investors into tech? what sort of percentages? >> from a macroeconomic sector point of view, i think that the technology sector is a good place to invest. certainly he's learned his lessons from what happened after the tech bubble burst. those companies that did survive must have been good in order to survive. they learned the lesson in terms of the amount of debt that they should be taking on. so they have strong, strong balance sheets. and also from a global economic
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point of view, they're benefiting from continued rapid growth in emerging markets. and an increasing middle class in emerging markets. >> okay. we're going to leave it there. thank you very much indeed for joining us. those companies that we talked about, are you invested in those companies? >> monetizing, it's been a long-term client of ours. no other relationship with the other two. >> thank you very much, indeed, as well. >> you're very good at it. duncan, thank you very much. >> thank you very much. coming up next, equity markets have been in a hesitant mode recently. what is likely to move the markets next? we'll discuss that with our strategist after the break. stay with us.
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welcome to "worldwide exchange" on this wednesday. here are your global headlines. starting in the u.s. where regulators held up a bit of a stop sign reportedly telling banks to hold off on dividends, until at least financial reform clouds clear up.
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>> here in europe, gordon brown is worries about growth in the euro zone. >> here in asia, china export and import figures for february blew past expectations reinforcing the case for a chinese yuan appreciation. >> welcome to "worldwide exchange" on this wednesday. of course, look at your scroll for stock futures. we're having some technical difficulties, but they are slightly higher in the nasdaq and the dow right now and the s&p 500 is right around the flat line. top stories here, u.s. regulators are telling banks to hold off on buying dividends. the financial times says the treasury and new york fed sent a letter back in december reminding companies they will have to meet certain criteria such as stress testing balance sheets. banks may have to wait until lawmakers draw up new rules on
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capital requirements and how to resolve failing firms. let's talk market strategy with bernie mcginn, cio of mcginn and o'neal. also still with us we have our special guest. bernie, i'll start with you. we have low volume, low volatility. for the volatility, it means we're too complacent. what is your take away from an investment standpoint? how do you read it? >> well, i think that you're right. i think people have gotten complacent. but think about where we were a year ago, a year ago today and there was anything but complacency. i think people are hesitant. there's not a lot of volume, as you know, and i think that that has to do with the fact that, you know, we've had such a big run and the question now is where do we go from here? >> well, listen, investors watch
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us to get actionable information. what do you do? if you have money to get to work, do you not put it in the equity market? is it toppy to you? do you take some profit here? how do you approach this market? >> well, i think you do all of the above. we're looking at the markets here. we see some pockets of opportunity. i like the large cap technology companies. the -- some of the financial large banks i like. i'd like better at a pullback. and i also like corporate bonds, laddered corporate bonds strategy. i think that's pretty appropriate for where we are today. >> just run us through that. how does that work? >> well, you go out there, you pick out the maturity range that you wanted and you sort of stagger the maturities. for example, an eight-year ladder term, you might buy bonds at two years, four year,
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six-year, eight-year intervals. so you have protection if rates go up because you always having something coming due and you can get some yield on the longer end without taking undue interest rate credit risks. >> what do you make of that? corporate bonds this time last year proved successful. now, is there still opportunity? >> i still would like corporate bonds probably more so at the lower range of investment grade and the upper end of high yield. i know the yield have come down a fair bit as a result of the rally in the credit markets. but historically, yields are still above average levels. you can get decent income from corporate bonds, especially when cash is earning nothing. corporate bonds have relatively low volatility and they're higher up in the capital structure of the company so they have greater capital security, as well. >> bernie, this is me,
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christine, here in asia. what would have to change for you to reconsider your bond strategy? would we need to see a big rally in the equity markets? >> well, i actually look at the bond strategy as an alternative to equities. but also, you know, in complimentary relzs with equities, i like equities here. i don't think that we're terribly overvalued. i think that the next couple of months or so, you could see a trade in a range. in fact, i see the economy -- you know, it's slowly getting better. it's going to take time and is you're going to need patience going forward. but i don't see the big downside hit that other people seem to talk about.
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>> since we have burny in a few minutes for something else, i want to put this to you, neal. we're seeing cash being returned to shareholders. when you look at the equity markets, are you now starting to chase the dividends a little bit? >> i think that's a very important thing. investors are going to be low because of continued subdued inflationary pressures. so they're going to be attracted toward income generating assets. so that means corporate bonds, we've talked about them. it also means high dividend yielding equities. large companies, international footprint, strong balance sheets that can provide a decent dividend. and also, i suppose, are commercial properties. but that does come with some liquidity risk, as well. >> all right, gentlemen, stick around for a little bit longer.
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thank you very much, neal, and bernie mcginn, cio of mcginn, mckeen and mcneal. stim still to come here on "worldwide exchange," for all you avid cyclers out there, after the break, find out how google -- it can do everything -- will be making your life easier when it comes to cycling.
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hi, ellen! hi, ellen! hi, ellen! hi, ellen! we're going on a field trip to china! wow. [ chuckles ] when i was a kid, we -- we would just go to the -- the farm. [ cow moos ] [ laughter ] no, seriously, where are you guys going? ni hao! ni hao! ni hao! ni hao! ni hao! ni hao! ni hao! ni hao! ni hao! ni hao! ni hao! ni hao! [ female announcer ] the new classroom. see it. live it. share it. on the human network. cisco.
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welcome to "worldwide exchange." here are some of the top stories we're watching from all around the world. citigroup has reached a deal to sell its private investment business to apollo management. the deal could close in the next few months. citi property manages $12.5 billion in real estate assets all around the world. the former head joseph asarak now runs part of the reep business. it will be worth about $2 billion probably when it prices today. i don't think we have citi trading right now in frankfurt because of our technical difficulties. but i will move on to bank of america, which is dropping overdraft fees on purchases made with debit cards as it tries to
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stay ahead of new federal rules that take effect this summer. bank of america used to charge $35 every time you had inefficient funds in your account. now you'll just be denied from making any transactions. this starts in july for new customers and august for existing customers. google, mindful or travelers on who wheels. the company is adding a bike lane to google maps. the new feature is only available in the u.s., at least for now. it recommends routes to steele steer bicycles away from big hills and highly congusted streets. google maps is its most popular website visited for maps in the past month with more than a 5,000 visitors. government officials said the country could seek a recuse from the international monetary plz fund. the high premium now charged by
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investors for greek bonds was simply unsustainable and must be brought down in the coming six to eight weeks. that comes after the greek prime minister met with president obama last night. president obama was open to an initiative to curve speculative trading in the markets which greece blames for exacerbating the greek debt crisis. cathy pacific announced results that beat expectations. cathay swung back into the black with a net profit of $604 million. >> if the market picks up a bit quicker than we planned, then we are in a position to put more flights on very quickly. and i think particularly on the cargo front, we might well end up doing that. >> however, cathay warned that it remains cautious about prospects for this year with strong field prices threatening
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to undermine spruktivety. >> michael, you talked about you like credit and equities in the medium term. what is it you fear most right now? what is your biggest risk? >> well, there are a number of risks lurking around every single corner. there is the risk that consumers will continue to tighten their belts in the face of high unemployment and stagnant income growth. there is the risk that banks will continue to pull in loans. there's the risk that china may clamp down on its economic policy. but ultimately, i don't think any of those risks will manifest themselves too strongly. but what it does mean is that we will be in an environment of elevated volatility and from time to time, we will be hitting these bursts of volatility. so it's very important to have a
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much more dynamic and a much more nimble tactic on occasion. >> neal, thank you so much for joining us today. now, munich re's fourth quarter net profits has risen due to high er premiums income. joining us for more is the ceo on the telephone. herr bomhard, thank you so much for joining us. back in january, you were fairly cautious. you still called this a difficult environment. i wonder with these figures today, you might not be feeling more optimistic. >> actually, not really. we feel if the challenges that the crisis is still on its way and that is always very important for insurance groups is that the risk free interest rate is very low and that poses a challenge to all of us. that is why we think overall the return on the assets will come
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down for most of the groups unless you add risk and that is why we had a little bit of a more gloomy outlook, if you like, compared to investments from last year. >> let's talk about that. we have sh fund managers saying the most dangerous market there is national debt because of the amount of issuance. are you not worried about that? >> actually, we did not add sovereign risk independently of who or wherever. we have quite a big book of government bonds and within that book, we have a share of around about 3%, for example, of greek bonds. we did not increase that position to any meaningful extent. but on the other hand, we are not afraid that we are anywhere close to a default. >> but are you worried generally about the amount of issuance we're going to get on major government debt, whether it's the u.s. or euro zone or uk?
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>> well, the question is are we afraid that maybe we see some migration of ratings or are we talking default? migration of ratings, yes, that could well happen. for an insurance company, normally this is not the real challenge as long as you have necessary solvency capital in place. a default would be a different story, but i think wherever you look, we are far from a default situation. >> okay. let's just talk about re-insurance rates. we haven't -- obviously, you know, there was an impact from chile and there was an awful disaster in terms of human figures, but not necessarily financial. what is going to happen to re-insurance rates? are they going to soften slightly? >> well, i think, first of all, apart from the human tragedy, it was quite a meaningful extent for the re-insurance industry, as well. chile is strongly insured, which is very helpful in the rebuilding of the country. on the other hand, an event like
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the one in chile will not necessarily change the supply and demand side of our business too quickly. we could imagine that on the net catastrophe business in some pockets, we see a certain hardening. what i don't expect the market will take a tremendous turn for that event. >> finally, warren buffett got brought into munich re. are you happy about that? does that clear you with confidence or are you worried that he might be making a move on wanting management changes. >> i doubt there is not anyone out there who would be content if he entered as a shareholder. if there's someone out there who knows our industry well, it would be him. therefore, as he always publicly states that he enters because he likes what the management is doing, not because he wants to change what they are doing, we take it as a very positive reaction to what we tried to do
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and achieve over the last three, four, five years. and we are very happy having him as our major shareholder now. >> nikolaus von bomhard, thank you very much for joining us on the telephone from munich. brian. >> coming up next, we have trade oil and weekly inventory data today. watch to see what happens next.
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okay. just over ten minutes until "squawk box" is on the air. joe is with us to tell us what is coming up today. morning, joe. >> hey, ross. a year ago, it was one year ago. the fwnl sector was teetering on the brink of disaster. it's interesting to hear some people, the question was it really? and you're hearing that now in hindsight that didn't want all the intervention. but it was a year ago now. stocks were down to single digits. dow components, single digits. fears of insolvency. it was a real mess. everyone remembers that, but if you had the guts, obviously, you could have made a killing.
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60%, 70% gains in the laugh year. we're going to take a look at whether banks are back, whether big money has learned to the market, and if investors and institutions are ready to take on more risks. then pirates on the prowl, the gangs of the high seas. who do they follow for the best targets? we'll unveil what it is at 7:00 a.m. eastern. and nouriel rubin anyway wants to be known as a realist. he's been saying this for a while. it's just that his realism hasn't been born out for the past eight months. how is it to work with the party boy economist? he hates that. we're going to talk about his series of economic recovery or the lack thereof. and are you ready for 3d tv? the successive avenue ta and a resurgence in the technology. "alice in wonderland."
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it has one company that may allow them to be -- i'd do 3d, carl, for us, do you think? what about fourth d or 5d? it's a band. where are you, ross inspect. >> i can't do this. i have to wear glasses to watch tv. i don't need another set in my living room. >> well, you know, if you can -- that's what you were doing in high school, obviously. >> yeah. way too active. joe, thank you very much. brian, are you into this 3d tv? >> yeah, well, i'm into it. i saw "avatar." it's pretty awesome. there's finally economic data to deal with here in the states, but mott than the second
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variety. inventorieses is seen rising 0.2%. let's check back in with bernie mcginn and talk about the trading day. you heard about what sort of is on tap. are any of thoughts going to drive markets? if not, what's going to move the markets today? >> well, you know, i think the people are focused on the anniversary of the change. and there is a confidence or a -- you know, a good feeling in the fact that we didn't go over the cliff and things are getting better. and that is what i think carries the day today. i think the citigroup news on the real estate deal will be positive and it will probably be positive for the whole sector. >> since when -- i wouldn't call this a lull. i don't know what to call it. but what do you think is on the horizon? we're at the end of earnings. we have the next big jobs
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report. what is the next big catalyst to move us? >> i think the next big catalyst to move us one way or the other is you have to focus on the banks. the governments around the world did a great job last year of saving the system. you know, of providing support for the banks and the financials. but the reality is that the issues that were causing the problems last year, you know, the bad loans, the bad pools of loans, they're still on the books. and they need to be cleansed from the system. and i think that that is the next challenge going forward is to get those pools of assets off the books so that the banks can, you know, move forward with recovery and the banks can be valued, you know, basically on an ongoing basis, not on a crisis type environment. and i think that's the key for the next couple of months. >> i bet the question to neal,
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i'll put it to you, looking after good companies that have major dividend yields, is that a great strategy for you right now? and if it is, do you have any names you want to share with our audience? >> i think that's always the case. we're large cap buyers with companies that have good balance sheets. but you know, i would look at some of the large cap -- i mean, the large cap tech companies. they've got good balance sheets, thooel they've got fair dif dens, nokia has nice dividends and nice prospects. and you go back to the pharmaceuticals. it looks like the health care legislation here, it's iffy if it's going to pass. those stocks have been good lately, but they have rock solid balance sheets and i think that they have done the -- i think they have done things that have helped their pipeline long-term. so i think that the dividends
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and dividend yields are sustainable. >> bernie, thank you very much. i'm brian shactman in the u.s. >> and i'm ross westgate here in europe. >> and here in asia, i'm christine tan. thanks for your company on "worldwide exchange."
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good morning. big money is back. the bulls are charging wall street as traders begin to embrace risk once again. washington says, wait one second. regulation, new fees and changing the rules of the investment game, the stories you need to know before the opening


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